What business owners are saying about the high cost of real estate – Daily News

My days are filled with advising entrepreneurs. As you can see, my commercial real estate practice focuses on family-run production and logistics companies in transition.

Often this transition leads to a decision about their locations. As an an example. Let’s say the company is considering a merger. When two groups become one, there is duplication of their facilities and, in some cases, overcapacity.

Our services are obliged to eliminate the excess by selling or subletting the undesired areas. Expansion into another federal state also requires a partnership with us. We are able to find vacant buildings that need a user and negotiate rental or sale transactions. A dramatic increase in orders could result in the need for a larger building.

Yes, we’ve seen this transition many times these days.

But today I want to focus on the conversations I have with entrepreneurs outside of their commercial real estate concerns. After all, small businesses are the fabric of our economy and employ a significant portion of our workforce.

In my four decades as a commercial real estate professional, I’ve never heard so much fear.

The attitude is tough. The 2020 pandemic put a lot of people on the unemployed list. To combat this, the state and federal government have created unemployment benefits, which in some cases can reach $ 1,000 a week. In addition, the period during which an unemployed person or worker on leave could receive these benefits was extended.

Hence, a worker could earn a pretty good living not working. Now that our economy is opening up again, manufacturing and logistics companies are finding it difficult to get workers back into their factories.

There is an acute shortage of available candidates for vacancies. Even before the pandemic, skilled workers were difficult to find. Those doing machining or other specialized equipment were in short supply. Now it is simply impossible to hire these experts. Additionally, our community colleges are not designed to prepare students for careers in manufacturing.

Raw material prices are exploding. Copper, petroleum, synthetic resin, building materials, lumber and steel are terribly scarce. Doubt but i say? Go to your local Home Depot and check the price for a piece of 2 × 4 lumber. You may want to bring your mortgage broker with you as a purchase could require a second mortgage on your home!

Manufacturers are being constrained at every stage, from stocking enough components to make their product, to higher wages for the people who run their machines, to higher gasoline prices that drive up shipping costs. Expect your wallet to be affected at some point.

Is the grass greener? Regardless of the size of an operation, many I’ve spoken to are considering a location outside of the state of California. But are other states really more receptive? Yes!

I have just come back from a trip to Georgia on behalf of one of our clients. They asked us to locate three facilities for them across the country – one in the west, one in the central part of the United States, and one in the east.

We have found Georgia and its individual communities are extremely receptive to the 200+ jobs our client will provide to the local economy. On the table are incentives, reductions in regulation, discounts on property taxes, simplified building permits, sales tax reductions, bonds for industrial development, employee training and tax breaks for hiring.

We were shocked at the red carpet that was rolled out for our requirements. And here I thought the red carpet was only seen at the Academy Awards. Boy was I wrong!

Overstretching the government. AB5, new AQMD requirements, minimum wage increases, noise protection and lengthy approval procedures all have an impact on the operation of a manufacturing or logistics company.

Add in some uncertainties about property taxes, long-term capital gains, the possible abolition of tax deferred exchanges, and the absolutely insane commercial real estate pricing and you get a feel for what keeps property owners up at night.

The California I remember embraced small businesses and provided a platform for success – by stepping aside. Hewlett Packard, Disney, Microsoft, Apple, and Amazon all started with a dream in a garage. Gosh, how far we’ve drifted.

Allen C. Buchanan, SIOR, is a Principal at Lee & Associates Commercial Real Estate Services, Orange. He can be reached at [email protected] or 714.564.7104.